BILL ANALYSIS                                                                                                                                                                                                    �



                                                                  SB 78
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          SENATE THIRD READING
          SB 78 (Budget and Fiscal Review Committee)
          As Amended  June 13, 2013
          2/3 vote.  Urgency 

           SENATE VOTE  :Vote not relevant  
           
           SUMMARY  :  Reinstates a tax on Medi-Cal managed care  
          organizations, for which revenue and General Fund savings are  
          included in the Budget Act of 2013.  Specifically,  this bill  :

          1)Imposes a tax, in 2012-13, for which the tax rate would be  
            equal to the gross premiums tax (2.35%) to generate $128.1  
            million General Fund savings.

          2)Requires current year revenues to be directed to the Healthy  
            Families Program.

          3)Authorizes a General Fund loan to the Managed Risk Medical  
            Insurance Board to cover the costs of the Healthy Families  
            Program until this tax revenue is received. 

          4)Imposes a tax, in 2013-14 and beyond, at a rate equal to the  
            state sales and use tax rate (3.9375%), for approximately  
            $342.9 million in General Fund savings on an ongoing basis.   
            In the budget year, it is projected that the Managed Care  
            Organization (MCO) tax would generate $644 million in revenue,  
            half of which would be used to draw down federal Medi-Cal  
            funds and used to pay back Medi-Cal managed care plans.  The  
            other half of these funds would be used to offset General Fund  
            expenditures for Medi-Cal managed care rates for children,  
            seniors and persons with disabilities, and dual eligibles.

          5)Includes a sunset of three years.

          6)Protects the tax from the Bradley-Burns local sales tax, which  
            prevents local communities from the ability to increase the  
            tax.

          7)Provides that the payment of the tax by plans is dependent on  
            the state meeting its obligation to pay plans appropriately.

          8)Stipulates the repeal of the tax if it is successfully  
            challenged or rescinded.








                                                                  SB 78
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          9)Requires that the tax be collected by the Board of  
            Equalization and that tax revenue received and allocated be  
            reconciled quarterly.

           COMMENT  :  This bill is a budget trailer bill within the overall  
          2013-14 budget package to implement actions taken affecting the  
          Department of Health Care Services and the Managed Risk Medical  
          Insurance Board.


           Analysis prepared by  :    Andrea Margolis / BUDGET / (916)  
          319-2099


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